There are a hundred little things that have to be done when you’re starting a business. You need to file for an assumed business name or set up an LLC, you need to map out your business plan, you need to do some market research, and you need to spend time on product development. Among all of those things that have to be done, there’s one task that often gets done in a rush and without much thought: choosing a credit card processor.

This is a mistake. Your choice of credit card processor can greatly impact your bottom line. You need to know a few things about how credit card processors work before you make a mistake and get stuck with one that’s not right for your business:

1. Credit card processors have widely varying terms. Unlike, for example, a savings account, terms on credit card processors are going to be very diverse. You have to spend some time doing the research if you’re going to get the one that truly fits your business.

2. They have widely varying customer service records, too. Customer service is key when it comes to a credit card processor. A processor with a large chargeback percentage is not a good choice, even if they’re the ones with the lowest rates, for example.

3. Your business type is a factor in what terms you’ll get. Are you starting an online business selling shot glasses with an ecommerce shopping cart? You need a different credit card processor than the lady down the street who’s starting up a clothing boutique. In many ways, this comes down to your acceptance method. If you physically swipe customer cards at a point of sale, you’re going to have different terms than if a web-based shopping cart handles it all for you.

4. Your transaction details will affect your terms, too. There are a couple of ways in which transaction details affect your terms. The first is in relation to your volume of transactions. A company that has 10,000 credit card transactions per month is in a very different situation than one that has 15 credit card transactions per month. The other way this matters is in regard to transaction size. Our friendly boutique owner might have an average transaction size of $100 or more, while your shot glasses might have an average transaction of $25. Some credit card processors are better for her, some are better for you.

5. Accepting credit cards will help your business, regardless of the credit card processor you pick. It’s a fact that’s been proven in research many times over the years: credit card transactions lead to higher purchase averages. Sure, you have to pay fees, but those higher purchase averages more than cover your fees in all but the rarest of circumstances.
Like other tasks involved in starting your business, don’t take this one lightly. Get rate sheets and quotes from several different processors before you make a commitment to one.

David Rodwell is a seasoned writer in business, personal finance and economics, taking a particular interest in payment processing. You can find more of his articles located at CreditCardProcessing.net.